# 16 Homework

```Lesson 16 Aggregate Planning Homework
Solved Problem #1: See textbook
Solved Problem #2: See textbook
#1: Refer to Lesson Example 1: Planners for a company that makes several models of tractors are about to
prepare an aggregate plan that will cover 6 periods. They have assembled the following cost information:
Output Costs
Regular time
2 per tractor
Overtime
3 per tractor
Subcontract
6 per tractor
Inventory Costs
1 per tractor per period on average inventory
Backorder Costs
5 per tractor per period
As you recall, the level capacity plan using 300 tractors per period produced a plan which cost \$4,700.
Also, we saw that the backorder quantity was 100 in period 5 with a cost of \$500.
Management has discussed the backorder situation with the production staff and they have agreed that the
backorders can be eliminated if they work overtime. The production staff is also aware if they work
overtime in earlier months that they will be able to take some time off in a later month.
1
Use a maximum of 300 regular time production units, with an overtime strategy:
Develop a plan which will lower costs and eliminate the backorder problem. Show your plan in the
following table. Note: you do not need to enter cells which have a value of 0.
1
Period
3
2
4
5
6
Total
Forecast
Production Schedule
Regular Time
Part Time
Overtime
Subcontract
Production - Forecast
Inventory
Beginning
Ending
Average
Backorder
Costs:
Regular @
Part Time @
Overtime @
Subcontract @
Hire/Lay off
Inventory @
Back orders @
Total
Explain the cost differences between the two plans.
If you were one of the production staff, would you be happy with this plan?
2
#2: Manager T.C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an
aggregate plan for the engine department for the forecast shown below:
Forecast
1
120
2
135
3
140
4
120
5
125
6
125
The department has a normal capacity of 130 engines per period. The costs are shown below:
Output Costs
Regular time (normal output)
\$60 per engine
Overtime
\$90 per engine
Inventory Costs
\$2 per engine per period on average inventory
Backorder Costs
\$90 per engine per period
Beginning inventory is 0 engines.
a.
Develop a chase strategy using normal output and overtime. Show your plan in the following
table. Note: you do not need to enter cells which have a value of 0.
1
Period
3
2
4
5
6
Total
Forecast
Production Schedule
Regular Time
Part Time
Overtime
Subcontract
Production - Forecast
Inventory
Beginning
Ending
Average
Backorder
Costs:
Regular @
Part Time @
Overtime @
Subcontract @
Hire/Lay off
Inventory @
Back orders @
Total
3
b.
Develop a level capacity plan that uses inventory to absorb fluctuations. Show your plan in the
following table. Note: you do not need to enter cells which have a value of 0. Note: half units are
acceptable.
1
Period
3
2
4
5
6
Total
Forecast
Production Schedule
Regular Time
Part Time
Overtime
Subcontract
Production - Forecast
Inventory
Beginning
Ending
Average
Backorder
Costs:
Regular @
Part Time @
Overtime @
Subcontract @
Hire/Lay off
Inventory @
Back orders @
Total
c.
Compare the cost of the plan in a. and b.
#3: Nowjuice, Inc. produces bottled pickled juice. A planner has developed an aggregate forecast for the
demand (in cases) for the next six months as shown below:
Forecast
1
4,000
2
4,800
3
5,600
4
7,200
5
6,400
6
5,000
The costs are shown below:
Output Costs
4
Regular time (normal output)
\$10 per case
Overtime
\$16 per case
Subcontracting
\$20 per case
Inventory Costs
\$1 per case per month on average inventory
Beginning inventory is 0 cases, and regular production capacity is 5,000 cases per month. No backorders
are allowed.
a.
Develop an aggregate plan using a level regular production strategy, inventory and overtime.
Show your plan in the following table. Note: you do not need to enter cells which have a value of
0.
1
Period
3
2
4
5
6
Total
Forecast
Production Schedule
Regular Time
Part Time
Overtime
Subcontract
Production - Forecast
Inventory
Beginning
Ending
Average
Backorder
Costs:
Regular @
Part Time @
Overtime @
Subcontract @
Hire/Lay off
Inventory @
Back orders @
Total
5
b.
Develop an aggregate plan using a combination of regular time, overtime (maximum of 500 cases
per month), inventory, and subcontracting (maximum of 500 cases per month) to handle variations
in demand. Show your plan in the following table. Note: you do not need to enter cells which
have a value of 0. Note: half units are acceptable.
1
Period
3
2
4
5
6
Total
Forecast
Production Schedule
Regular Time
Part Time
Overtime
Subcontract
Production - Forecast
Inventory
Beginning
Ending
Average
Backorder
Costs:
Regular @
Part Time @
Overtime @
Subcontract @
Hire/Lay off
Inventory @
Back orders @
Total
6
c.
Develop an aggregate plan using a combination of regular time, overtime (up to 750 cases per
month), and inventory to handle variations in demand. Show your plan in the following table.
Note: you do not need to enter cells which have a value of 0. Note: half units are acceptable.
1
Period
3
2
4
5
6
Total
Forecast
Production Schedule
Regular Time
Part Time
Overtime
Subcontract
Production - Forecast
Inventory
Beginning
Ending
Average
Backorder
Costs:
Regular @
Part Time @
Overtime @
Subcontract @
Hire/Lay off
Inventory @
Back orders @
Total
#4: Refer to the Master Scheduling example in the lesson. The following table shows the Forecast,
Customer Orders for a company:
Forecast
Customer Orders
a.
1
30
33
2
30
20
3
30
10
Planning Period
4
5
30
40
4
2
6
40
7
40
8
40
What is the projected demand for the 8 planning periods? Complete the table below.
Projected Demand
7
b.
Assuming the beginning inventory is 64 units, what is the projected on hand inventory? Complete
the table below.
Projected On Hand
c.
In the lesson, we used the MPS rule to order when the projected on hand was negative. Here, we
wish to change the rule to order when the projected on hand inventory would be less than 10.
Compute the MPS and show your result in the table below using the rule lot size is 70.
MPS
d.
What is the available to promise (ATP) for the scenario in c.?
ATP
#5: The following table shows the Forecast, Customer Orders for a company:
Forecast
Customer Orders
1
30
33
2
30
25
3
30
16
Planning Period
4
5
30
40
11
8
6
40
3
7
40
8
40
Use the MPS rule to order when the projected on hand inventory is negative, and calculate the Projected
Demand, Projected On Hand, MPS, and ATP by showing your answers in the table below. The beginning
inventory is 40 units and the lot size is 50 units.
Projected Demand
Projected On Hand
MPS
ATP
#5: The following table shows the Forecast, Customer Orders for a company:
Forecast
Customer Orders
1
50
52
2
50
35
3
50
20
Planning Period
4
5
50
50
12
6
50
7
50
8
50
8
a.
Use the MPS rule to order when the projected on hand inventory is negative, and calculate the
Projected Demand, Projected On Hand, MPS, and ATP by showing your answers in the table
below. The beginning inventory is 0 units and the lot size is 35 units.
Projected Demand
Projected On Hand
MPS
ATP
b.
Use the MPS rule to order when the projected on hand inventory is negative, and calculate the
Projected Demand, Projected On Hand, MPS, and ATP by showing your answers in the table
below. The beginning inventory is 0 units and the maximum lot size is 35 units. Minimize the
inventory on hand.
Projected Demand
Projected On Hand
MPS
ATP
c.
Explain the difference between the two lot size rules. Lot size is 70 and maximum lot size is 70.
9
#6: Consider the following scenario: The forecast is 80 units for each of the first two periods and 60 units
for the next three periods. The starting inventory is 20 units. Committed orders are 82, 80, 60, 40 and 20
for the first five periods, respectively.
The company uses a chase strategy for determining the MPS production lot size, except there is an upper
limit on the lot size of 70 units. Also the desired safety stock of at least 10 units (i.e. inventory on hand can
not drop below 10 units). The company always wants to an available to promise of at least 10 units.
Calculate the Projected Demand, Projected On Hand, MPS, and ATP by showing your answers in the table
below.
1
2
3
4
5
6
7
8
Forecast
Customer Orders
Projected Demand
Projected On Hand
MPS
ATP
10
```